JSE rebounds to end day higher as risk-on trade returns

Losses by market heavyweight Naspers and Capitec weighed on the all share index at the opening
Image:
Siphiwe Sibeko/Reuters via The Conversation. File photo

After starting the day weaker‚ the Johannesburg Stock Exchange (JSE) ended trade on Tuesday in positive territory following a mild recovery in global risk-on sentiment.

Losses by market heavyweight Naspers and Capitec weighed on the all share index at the opening. However‚ a rebound in the rand supported banks and retailers‚ later joined by property stocks. Global diversified miners climbed‚ while platinum stocks were sharply higher as the platinum price jumped nearly 3 percent.

Risk-on sentiment was boosted by US President Donald Trump seemingly distancing himself from previous threats that the US might leave the World Trade Organisation (WTO).

A deal by German Chancellor Angela Merkel with dissenting Christian Social Union (CSU) members of her government’s coalition set the mood for the day‚ encouraging investments in more risky assets‚ with European markets also gaining.

However‚ Old Mutual Investment Group analyst Grant Watson warned that the investment landscape remained volatile. Uncertainty still reigned‚ compounded by the intensifying trade war between the US and China. "We are currently overweight on banks and‚ within resources‚ more general resources‚" he said.

This position would remain dependent on global factors set to drive the market in the coming months‚ Watson said.

The rand firmed in intraday trade as the dollar softened slightly to the euro ahead of the release of the latest minutes of the US Federal Reserve on Thursday. This might give an indication as to the extent of hawkish views in the Fed‚ with the market pricing in another two interest-rate hikes in 2018.

The Dow was firmer in early trade and‚ at the JSE’s close‚ had gained 0.3% following positive trade in European markets‚ where the FTSE 100 was up 0.73% and the DAX 30 1.03%.

Glencore plummeted 8.57% to R58.54 after it was subpoenaed by US authorities demanding documents relating to a possible corruption and money laundering. The US department of justice is investigating the company in terms of the Foreign Corrupt Practices Act and US money laundering statutes.

Capitec ended the day 3.94% lower at R853‚ after the Reserve Bank denied requesting an investigation into Capitec’s initiation fees on one of its discontinued loan products; the news initially drove the share down nearly 6% at one point.

Steinhoff rocketed 31.39% to R1.80 as the market saw some positive developments in its financial announcement last week.